Correlation Between Arbor Metals and Lupaka Gold

Can any of the company-specific risk be diversified away by investing in both Arbor Metals and Lupaka Gold at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Arbor Metals and Lupaka Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arbor Metals Corp and Lupaka Gold Corp, you can compare the effects of market volatilities on Arbor Metals and Lupaka Gold and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Arbor Metals with a short position of Lupaka Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and Lupaka Gold.

Diversification Opportunities for Arbor Metals and Lupaka Gold

0.3

Correlation Coefficient

Arbor Metals  Lupaka Gold

Weak diversification

The 3 months correlation between Arbor and Lupaka is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and Lupaka Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupaka Gold Corp and Arbor Metals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Arbor Metals Corp are associated (or correlated) with Lupaka Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupaka Gold Corp has no effect on the direction of Arbor Metals i.e., Arbor Metals and Lupaka Gold go up and down completely randomly.

Pair Corralation between Arbor Metals and Lupaka Gold

Assuming the 90 days horizon Arbor Metals Corp is expected to generate 0.75 times more return on investment than Lupaka Gold. However, Arbor Metals Corp is 1.34 times less risky than Lupaka Gold. It trades about -0.14 of its potential returns per unit of risk. Lupaka Gold Corp is currently generating about -0.22 per unit of risk. If you would invest  49.00  in Arbor Metals Corp on December 4, 2024 and sell it today you would lose (7.00) from holding Arbor Metals Corp or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Arbor Metals Corp  vs.  Lupaka Gold Corp

Arbor Metals Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Metals Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arbor Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Lupaka Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lupaka Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Arbor Metals and Lupaka Gold

The main advantage of trading using opposite Arbor Metals and Lupaka Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Metals position performs unexpectedly, Lupaka Gold can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lupaka Gold will offset losses from the drop in Lupaka Gold's long position.

The idea behind Arbor Metals Corp and Lupaka Gold Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.